Succession Planning: How a BAM Firm Became Buckingham

BAM Advisor Services

Aug | 29 | 2016

As a wealth advisor, Bill Morgan knew the value of planning when it came to the future of his business. After all, he’d walked more than a few of his clients through the same transition during his 30-year career as a tax specialist and wealth advisor. And just as it had been for them, he experienced firsthand how exciting — and emotional — the process could be when he sold his firm, Herbein Wealth Management, to Buckingham in July. With a lot of professional years ahead of him and a successful firm with a skilled team of next-generation advisors in place, Bill doesn’t fit the profile of an advisor looking to sell his practice. But as a 16-year member of the BAM ALLIANCE with a seat on the BAM Advisor Council, Bill understood how Buckingham (which founded BAM Advisor Services, home to the BAM ALLIANCE) influenced the BAM experience for the better. When the opportunity presented itself to potentially become a part of Buckingham, he felt he owed it to his clients — and his team — to pay attention. Below, Bill shares how he decided to take the leap.

When did you first start thinking about selling your firm?

Last year, I wanted to sit down and talk with Buckingham leadership about their approach to succession. I had long admired as an outsider how smoothly the firm’s founders had transitioned to the next generation of leadership. Too many businesses struggle with that issue, and I appreciated how Buckingham had managed to keep their founders connected in a way that allowed them to provide guidance to a new crop of leaders. It was something I wanted to replicate with my own firm someday. Acquisition wasn’t on my mind, but I was interested in hearing what they had to say because I have so much respect for the firm.

What was your decision-making process like?

As a business owner you have a lot more riding on the choices you make than your own personal gain. I knew I wanted to make the best decision for my team and my clients — their opportunity for success was a very important factor in the whole process. We talked over the different options, including what impact our ownership relationship with our CPA firm would have in the event of my premature death or during a standard buyout scenario. We discovered during the process that in our existing buy/sell relationship, our firm was undervalued. It was an eye opener, and it made the idea of selling to Buckingham appealing in a way it hadn’t been before we played out various “what if” scenarios. You think you’ll have time to figure this out, but you never really know.

What ultimately made the decision for you?

I never looked at selling simply as a liquidity event for me. I needed to be sure it would work for everyone else as well. At first, there was pushback on the idea. After all, we thought we had a good, natural succession plan in place. I have an awesome team in Chiara (Renninger) and Scott (Worley), and imagined my transition out one day would be a smooth one. But when we realized their ability to buy out my shares could potentially be more complicated — and put their ownership at risk — we started considering alternatives to what we had planned. If I did die prematurely, it could be hard for them, because they’d only own a small portion of the firm — our CPA partners would own the majority. They’d be left scrambling at an already difficult time.

Once you had opened your mind to selling, what made Buckingham the best choice?

I never even spoke to another potential buyer. I know and trust Adam Birenbaum. Over the years I’ve grown to know and like everyone from Bert Schweizer to Mont Levy to Al Sears and the entire leadership team. It felt so good going into the deal with an existing relationship built on respect and trust. It was a leap of faith, but one others had made before me with success.

How did the experience of selling your firm live up to your expectations — or anxieties?

Any advisor selling their business is going to worry about how their clients and others who have helped them along the way are going to react. But everyone was supportive. Our clients felt good knowing we were making sure they’d be well cared for if anything happened to any one of us. Those that were business owners had respect for the time and effort we had put into planning for the future.

Were your clients nervous about things changing?

I think people have some degree of skepticism in a merger when you say things aren’t going to change, but so far there hasn’t been any negative fallout. We made sure from the beginning that they understood that it was really business as usual for them. They were very familiar with the BAM ALLIANCE and the resources it provided our firm over the years. So much of what we did for them we learned from BAM and, by extension, Buckingham. They also knew that from an investment perspective nothing was going to change. In addition, joining Buckingham allowed us to enhance our business. We now have the ability to go after 401(k) business we weren’t able or prepared to before. The ability to serve more people — or deepen the relationship with existing clients — is certainly a bonus.

How was the transition from a logistical perspective?

It was stressful, both for reasons unique to my business and because anytime you are changing procedure and systems, there is bound to be a learning curve. We’re past that now, but I do feel like going forward I can be a good resource for helping make the transaction process better and better for future firms.

How about emotionally?

I knew it would be emotional, but nothing can prepare you for exactly how it will be. I put my heart and soul into my business for 16 years, and now that all was changing. I’ve been connected in some way to the Herbein name since 1979 — nearly my entire professional career, so letting that go didn’t come easily. But you get through it. The benefits outweighed any hesitation I felt.

Any tips for advisors considering selling their practice?

Have good counsel. Have someone you can bounce ideas and concerns off of, who you know has your best interest in mind. For me, that was Jeff McGovern, Buckingham’s Director of Transactions. I’d hear from my attorney about some element or another in the negotiations, and Jeff and I would talk it out. I thought that was so amazing — usually the relationship between seller and buyer is an adversarial one to some degree — but Jeff was so supportive and provided good, insightful guidance when I needed it. I thought that spoke volumes about Buckingham’s approach to transactions.

What’s next for you?

My first concern is seeing my clients through a time of transition. That’s what we’re focusing on now. But since I didn’t go into this as an exit strategy, I’m excited about what is to come. As part of Buckingham, I can impact clients beyond my own, and advisors, too, through the BAM ALLIANCE. I feel so good about that. I have a passion for advanced planning topics and helping create a more secure wealth for my clients and their heirs. To help shape policy in that area is an exciting thought — a professional capstone I’d be proud of. I also know I can be a valuable resource to other potential advisors thinking of selling to Buckingham and, even one step further, to our wealth management clients who are themselves business owners that may one day sell their businesses.